Introduction
Climate Risk Management and Scenario Analysis
Governance, Risk Management, and Operations for Money Services Business
Payment Cards Framework
Bank Negara Malaysia has issued five exposure drafts to the public for feedback.
Two of the exposure drafts, Management of Participating Life Business and Management of Insurance Funds, apply to life insurers licensed under the Financial Services Act 2013 carrying on participating life business and insurers licensed under the Act, respectively.
This article discusses the purpose and key aspects of the other three exposure drafts:
- Climate Risk Management and Scenario Analysis;
- Governance, Risk Management, and Operations for Money Services Business; and
- Payment Cards Framework.
Climate Risk Management and Scenario Analysis
This exposure draft:
- is intended to complement the Climate Change and Principle-based Taxonomy, the Value-based Intermediation Financing and Investment Impact Assessment Framework (VBIAF) and the VBIAF Sectoral Guides;
- will apply to the following financial institutions:
- licensed businesses and financial holding companies approved under the Financial Services Act 2013;
- licensed Islamic banks, licensed takaful operators, licensed retakaful operators and financial holding companies approved under the Islamic Financial Services Act 2013; and
- development financial institutions prescribed under the Development Financial Institutions Act 2002;
- sets out the proposed requirements and guidance on climate risk management and scenario analysis to ensure that financial institutions strengthen the management of financial risks stemming from climate change to enhance the resilience of the financial sector against climate-related risks and to facilitate an orderly transition to a low-carbon economy; and
- will come into effect on 1 June 2022, subject to the transitional arrangements as set out in paragraph 4.1.
Feedback on the exposure draft must be submitted to Bank Negara Malaysia by 31 March 2022.
Governance, Risk Management, and Operations for Money Services Business
This exposure draft:
- applies to persons licensed under the Money Services Business Act 2011 (MSB licensees);
- sets out, among other things, the minimum standards that MSB licensees must observe when implementing sound governance, appropriate risk management and robust internal control systems for their business. The standards will be put in place to strengthen consumer protection and safeguard the industry from being used as a conduit for illegal activities, money laundering and terrorism financing;
- will supersede the Guidelines on Governance and Operational Requirements on Conduct of Money Services Business issued on 15 October 2012, the Guidelines on Risk Management and Internal Controls for Conduct of Money Services Business issued on 6 December 2012 and the other guidelines, circulars and notices set out in Appendix I thereof.
Feedback on the exposure draft was due to be submitted to Bank Negara Malaysia by 28 February 2022.
This exposure draft:
- will apply to the following financial institutions:
- issuers of credit cards, debit cards and international brand prepaid cards that are approved under the Financial Services Act 2013 or the Islamic Financial Services Act 2013;
- merchant acquirers of merchant acquirers of credit cards, debit cards and international brand prepaid cards registered under the Financial Services Act 2013 or the Islamic Financial Services Act 2013; and
- operators of payment systems approved under the Financial Services Act 2013 or the Islamic Financial Services Act 2013;
- is to ensure that the cost of accepting payment cards continues to remain fair and reasonable through revision of the interchange fee ceilings to reflect the latest underlying cost; and
- outlines the measures that enable merchants to manage their payment acceptance cost and address other distortions and frictions in the payment card market to foster greater usage and acceptance of payment cards.
Feedback on the exposure draft was due to be submitted to Bank Negara Malaysia by 15 February 2022.
For further information on this topic please contact Pamela Kung at Shearn Delamore & Co by telephone (+60 3 2027 2911) or email ([email protected]). The Shearn Delamore & Co website can be accessed at www.shearndelamore.com.